HCMC Q arterl ReportHCMC Quarterly Report -...

CBREMarket Insights from CBRE

HCMC Q arterl ReportHCMC Quarterly Report Q1/2013

Presented by:Presented by:

Dung Duong

Senior Managerg

CBRE (Vietnam) Co., Ltd.Thursday, April 4, 2012

V IETNAM ECONOMYQ 1 / 2 0 1 3 P E R F O R M A N C E

2.5

3.0

3.5

4.0

20

25

terest

rates

(%)

Inflation surged

Monetary expansion

Q 1 / 2 0 1 3 P E R F O R M A N C E

CPI, VN (% y-o-y))CPI, VN (% m-o-m)

Refinancing rate (%)

0.5

1.0

1.5

2.0

10

15

CPI (

% m

-o-m

)

CPI (

% y-

o-y) /

In

Refinancing rate (%)Rediscounting rate (%)

-1.0

-0.5

0.0

0.5

0

5

Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13

Monetary contractionInflation controlled

Q1/2013 Q4/2012Q-o-Q

Q1/2012Y-o-y

GDP (% y-o-y) 4.9% 5.4% 4.6%

CPI (% y-o-y, e-o-p) 6.6% 6.8% 13.9%

E h t ( ) 20 828 20 828 20 828Exchange rate (e-o-p) 20,828 20,828 20,828

Export (US$ Bn) 29.7 -3.7% 19.7%

Import (US$ Bn) 29.2 -4.5% 17.0%Import (US$ Bn) 29.2 4.5% 17.0%

FDI Implemented (US$ Bn) 2.7 14.4% 7.1%

International Arrivals (million arrivals) 1.0 -9.6% 8.0%

2 CBRE RESEARCH & CONSULTING MARKET INSIGHTS FROM CBRE’s HCMC QUARTERLY REPORT | APRIL 2013

Source: General Statistics OfficeRetail and Services Turnover (trillion dong) 636.1 4.1% 11.7%

VIETNAMESE ECONOMYM o r e c o m p e t i t i v e b u s i n e s s e n v i r o n m e n tM o r e c o m p e t i t i v e b u s i n e s s e n v i r o n m e n t

Decree 02Decree 02

SBV to provide VND30 trillion loan at 6% interest rate for:

• Governmental employees and people of the armed

forces to rent and buy social houses.

•Or rent and buy commercial houses with a small area of

less than 70 sm

Decrease in lending rate

less than 70 sm

Lending rates decreased to 11% - 12%

More psychological support, real effect remain to be

seen.

Current % y-o-y

Source: Stockbiz, FPTS, SJC

VN-Index 505.9 12.5%

Real Estate Holding & Development - listed stocks 46.2 4.3%

Real Estate Services - listed stocks 24.1 -5.1%


Gold price (VND mil per tael) 43.6 -0.5%

VIETNAMESE ECONOMY

I n t e r e s t r a t e s a r e f i n a l l y a t l e v e l s w h i c h e n c o u r a g eI n t e r e s t r a t e s a r e f i n a l l y a t l e v e l s w h i c h e n c o u r a g e p e o p l e t o m o v e m o n e y o u t o f d e p o s i t s .

Cut main policy rates by 100bp

•Refinancing rate: lowered to 8% from 9%•Discount rate: to 6% from 7%•Cap on VND deposit interest rate: cut to 7 5% from 8%•Cap on VND deposit interest rate: cut to 7.5% from 8%

Gradual recovery in domestic demand

B tt dit diti•Better credit conditions•Robust FDI inflow (129% y-o-y)•Improved income from rising exports (19 7% y-o-y)Improved income from rising exports (19.7% y o y)


VIETNAMESE ECONOMY

Non performing loans:

• NPL ratio: decreased from 8.6% (by end of 2012) to 6% (Feb 2013) of outstanding loans as the latest public outsta d g oa s as t e atest pub cnumber from SBV

The government will establish an Vietnam Asset Management Company (VAMC)The government will establish an Vietnam Asset Management Company (VAMC) in April 2013

• Initial capital: USD 4.78 billion

• Target to resolve NPL (less than 3%) by VAMC bond

= > N P L ’ s h a v e f i n a l l y b e e n a c k n o w l e d g e d w i t h t h e A M C – t h e y r e m a i n a l o n g w a y f r o m b e i n g

l d k l d t i t i t h i h t


r e s o l v e d a c k n o w l e d g e m e n t i s a s t e p i n t h e r i g h t d i r e c t i o n .

HCMC OFFICE MARKETH C M C B E C O M E S R E G I O N A L L Y C O M P E T I T I V E A G A I N

$100.0

Prime rent in key cities – Asian Pacific Region (US$/sm/month)*

H C M C B E C O M E S R E G I O N A L L Y C O M P E T I T I V E A G A I N

$60.0

$80.0

$100.0

$20.0

$40.0 Budget constraints remain a

$.0Singapore Taipei Kuala

LumpurHo Chi Minh Ha noi Bangkok Manila

remain a consideration for clients, but rental

levels are now levels are now attractive

•Prime Rent represents the top open market rent that is achievable•Rents are quoted on NLA basic.

Rent of prime offices in HCMC is becoming comparable with regional neighbours-> the city is therefore more attractive in terms of cost and pricing for foreign companies.

Demand is spread across the Grade A and B market as there has been a range of space available whichcansuit differingbudgets


which can suit differing budgets.

HCMC OFFICE MARKETR E N T S P A S S T H E B O T T O M

The market wide rental

R E N T S P A S S T H E B O T T O M

HCMC Office Market Performance – Grade A & B

increased by 2.5% q-o-q, ending the quarter at

US$218psm/pm$25.01000000.0

US$21.8psm/pm.

The vacancy rate of Grade A propertiescontinuedto

$21.0

$23.0

600000.0

800000.0

m/m

onth

)

A)properties continued to

decrease as new properties leased space.

Th i th $17 0

$19.0

200000 0

400000.0

Ren

t (U

S$/

sm

Are

a (s

m, N

LA

The vacancy space in the Grade B market increased

slightlyowingtonew$15.0

$17.0

.0

200000.0

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

age

Mar

ket

RA

slightly owing to new supply but this did not

create downwards t l

2011 2012 2013

Ave

ra

Leased Area Vacant Area Asking Rent

pressure on rentals.


HCMC OFFICE MARKETS T R O N G T A K E - U P

STRONG take up in both Grade A and Grade B segment especially in new buildings

S T R O N G T A K E U P

(Q1/2013)segment, especially in new buildings.

Demand mainly derived from existing tenants who

(Q1/2013)

31,873 sm

Demand mainly derived from existing tenants who want to UPGRADE or EXPAND .

Deal size INCREASED during the quarter with a notable number of deals being completed that were larger than 1,000sm. A trend of CONSOLIDATION was witnessed as existing occupiers took the opportunity to recognise cost efficiencies through re-aligning their space requirements to single buildings as oppose to multiple locations.

Demand comes from a range of tenant groups including legal, pharmaceutical, oil & gas, garment companies and sourcinggroups

17,133 sm(Q4/2012)


companies and sourcing groups.

HCMC OFFICE MARKETQ 1 M A J O R E V E N T S – N E W L A U N C HQ 1 M A J O R E V E N T S N E W L A U N C H

January 2013 – PresidentPlace, the first LEED officeb ildi l h d

January 2013 – PresidentPlace, the first LEED officeb ildi l h dbuilding was launchedofficially. The building isalready over 50%occupied.

building was launchedofficially. The building isalready over 50%occupied.


occup edoccup ed

HCMC OFFICE MARKETO U T L O O K

Given tightening supply and existing demand, the market wide average asking rent is expected to be stable or increasemarginally through2013.

O U T L O O K

increase marginally through 2013.

Even though vacancy rate in Grade B segment increased slightly during Q1/2013, the space available will be absorbed going forward and will create minimal, if any, downwards pressure on rentals.

F U T U R E S U P P L Y

Lim Tower– D1

Grade A

Area: 22 000 sm NLA

Times Square– D1

Grade A

Area: 12 704 sm NLA

Saigon Airport Plaza – Tan Binh District

Grade B

Le Meridien – D1

Grade A

Area: 9 125 sm NLAArea: 22,000 sm NLAArea: 12,704 sm NLAArea: 11,000 sm NLA

Area: 9,125 sm NLA


HCMC RESIDENTIAL MARKETN E W L A U N C H E S – H I G H E N DN E W L A U N C H E S H I G H E N D

• Project: The Prince ResidenceDe eloper No aland

• Project: Happy Valley • Developer: Phu My Hung • Developer: Novaland

• Location: Phu Nhuan District• Total unit: 277

Developer: Phu My Hung• Location: Phu My Hung NUA• Total unit: 541

• Launch: March 2013• Unit launched: 277

• Launch: March 2013• Unit launched: 163


HCMC RESIDENTIAL MARKETN E W L A U N C H E S - A F F O R D A B L EN E W L A U N C H E S A F F O R D A B L E

• Project: SREC 2 • Project: Nhat Lan 3 Project: SREC 2 • Developer: Saigon Corp. + Hung Thinh• Location: District 2

Project: Nhat Lan 3 • Developer: BCCI• Location: Binh Tan District

T t l it 240• Total unit: 104• Launch: Q1 2013• Unit launched: 104

• Total unit: 240• Launch: January 2013• Unit launched: 240


Unit launched: 104 Unit launched: 240

HCMC RESIDENTIAL MARKETN E W L A U N C H E SN E W L A U N C H E S

More new launches: 4 projects in Q1/2013 vs 3 in Q4 2012;

More new units: up by 21.0% y-o-y; but down 11.9% q-o-q to 784 units owing to smaller scale ofMore new units: up by 21.0% y o y; but down 11.9% q o q to 784 units owing to smaller scale of the project.Developer’s positive view about the market;Lunar New Year had certain positive impacts;p p ;

T R A N S A C T I O N S

Reasonable transaction levels at newly-launched projects thanks to competitive pricing;

ProjectTotal unitlaunched

Sold rateto competitive pricing;

Transactions also witnessed at existing projects which have good location significant

Happy Valley (P1)163

(total 541)80%

Th P i R id 2777.2% good location, significant

construction progress and attractive payment schedules: Sunrise City City Garden Thao

The Prince Residence 2777.2%

(38.6% committed)

Metro Apartment (SCREC 2)

104 85%Sunrise City, City Garden, Thao Dien Pearl;

Affordable segment: continued to see stable demand;

(SCREC 2)

Nhat Lan 3 240 72%

Source: CBRE


to see stable demand;Source: CBRE

HCMC RESIDENTIAL MARKETP R I C E S

Primary market:Newly launched developments: launch prices more

P R I C E S

y p prealistic and competitive:

• High-end apartments in Phu My Hung NUA: from US$1,300 psm (bare unit);

Secondary price changes (q-o-q change)p ( )

• Affordable apartments: price close to US$600 psm;• Low management fee (Phu My Hung case):

VND6,000-VND12,000 psm / month including parking;3%5%

Luxury High-end Mid-end Affordable

Secondary market:

L 2 2% 8 9%7%-5%-3%-1%1%

2009 2010 2011 2012 20.13

Luxury : 2.2% q-o-q; 8.9% y-o-y

High-end: 0.8% q-o-q; 5.3% y-o-y

Mid end: 0 1% q o q; 7 1% y o ySource: CBRE

-11%-9%-7%

Mid-end: 0.1% q-o-q; 7.1% y-o-yAffordable stayed flat throughout the year.


HCMC RESIDENTIAL MARKET2 0 1 3 O U T L O O K2 0 1 3 O U T L O O K

2013 FORECASTChallenges remain, investments opportunities exist.

Finance continues to be developers major challenge;

The effects of the solutions for saving real estate i.e. the VND30 trillion credit package not to be seen until Q3 2013 at the earliest;

There would have no room for further price reductions in the primary market but flexible payment terms, gift, some discounts expected to continue;

Hand-over condition: shift from semi-finished to bare unit.

PROJECTS TO BE LAUNCHED

Delta River Tower

District 1

SSG Tower

Binh Thanh District

Happy Valley – P2

District 7

PROJECTS TO BE LAUNCHED

182 luxury units 78 high-end units143 high-end units


HCMC RETAILQ12013HIGHLIGHTS

Shopping centreswith high rental rate start to suffer from tenant turnover in short term=>PRICING iskey factor

Q1 2013 HIGHLIGHTS

short term=> PRICING is key factor.

CBDrentsstayedstable forbothshoppingcentreanddepartmentstoreduringCBD rents stayed stable for both shopping centre and department store during the quarter.

In non-CBD, shopping centre’s rent increased 6.2% q-o-q owing to the introduction of Pico Plaza while department store rent stayed unchanged.

Q1/2013(q-o-q)

Shopping centre

Department store

100

120

140CBD - SC Non CBD - SC CBD - DS Non CBD - DS

Rent –CBD

Rent 40

60

80

100

US$/

sm/m

onth

Rent –Non CBD

Vacancy0

20

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1


2011 2012 2013

HCMC RETAILQ 1 / 2 0 1 3 H E A D L I N E SQ 1 / 2 0 1 3 H E A D L I N E S

HCMC Retail Market

In spite of the increased supply

HCMC Retail Market

18450pp y

and a downward trend in vacancy,

12300

ate, %

d smy,

it may take a while for new 6150 Va

canc

y ra

NLA,

thou

sand

projects to prove their long term 00

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

N

success. Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

2011 2012 2013Supply Vacancy rate

* All rents are quoted on NLA, exclusive of VAT and service charges

Source: CBRE

Supply Vacancy rate


Source: CBRE

HCMC RETAILREVISEDCONCEPTTOBEMORECOMPETITIVE

SaigonSquare ‘bazaar’concept

REVISED CONCEPT TO BE MORE COMPETITIVE

Saigon Square, bazaar concept proving to be a preferable alternative for weakly-performing shopping centre. (Saigon Superbowl, ThuanKieuPlaza)

Shopping centres that failed to attract tenants are changing their design and g g gunit size to meet demand (Crescent Mall)

Zen Plaza will reserve more spaces forF&Bfor F&B.


HCMC RETAILN E W L A U N C H E SN E W L A U N C H E S

PICO PLAZA – TAN BINH BITEXCO FINANCIAL TOWERIcon 68 Shopping CentreIcon 68 Shopping Centre

Pico Electronics Supermarket

• Open: 10 January 2013

• Retail GFA: 18,000 sm

• Re-launch: 28 January 2013



• Number of floor: 5 • Number of floor: 5

HCMC RETAILF U T U R E S U P P L YF U T U R E S U P P L Y

Future supply in 2013 includes :• 4projectswith nearly22500sm4 projects with nearly 22,500 sm

• 1 department store• 3 retail arcade/podium

• CantavilPremier - Parkson and LotteCinema

• Fitting out

• Expectedopen:Q4/2013

• Times Square

Expected open: Q4/2013


• Number of floor: 6

• Saigon Airport Plaza –Tan Binh

• Leasing

E t d S t b 2013• ThaoDienPearl –D2

• Leasing

• Expected open: Q3/2013

• R t ilGFA 3200 • Expected open: September 2013



• Leasing

• Expected open: Q4/2013

• RetailGFA:20400sm






HCMC SERVICED APARTMENTSQ 1 R E V I E W

NEW SUPPLY – 2 international branded projects:

Q 1 R E V I E W

Capri Hotel Resicence,District 7, 175 units

Somerset Vista Ho Chi Minh City, District 2, 100 units

(20 of which are ready for move in)

March 2013, Buy-to-let – Five fully-furnished Sky Villas of 4 bedrooms are

ready for lease at Imperia An Phu,

RENTS

( y ) ready for lease at Imperia An Phu, District 2

Grade A Vacancy Grade B Vacancy Grade A Rents

Historical Market Performance, HCMC

RENTS:

• Grade A rent saw a minor decrease of 1.2% q-o-q as 8/9 projects adjusted their quoting rents 20%

30%

$40

$50

y y

Grade B Rents Non-CBD newcomer

p j j q gdownwards in Q1. Grade A rentals have witnessed

a drop of 16.8% from their recent peak.

• Grade B average rentals decreased by 4 5% q o q

10%$30


• Grade B average rentals decreased by 4.5% q-o-q.

Source: CBRE

00%$202011 2012 2013

HCMC SERVICED APARTMENTSC O M P E T I T I O N F R O M B U Y - T O - L E TC O M P E T I T I O N F R O M B U Y T O L E T

BIGGEST & FIERCEST COMPETITOR:Good quality accomodationq y

At cheaper and very flexible rentsIndividually owned, so landlord is flexible on leasing terms and conditions

$

CBD projects – CEO/Management level tenants

FAVOURABLE BUY-TO-LET OPTIONS:

Vincom Center B Avalon The LancasterVincom Center B Avalon The Lancaster

Non-CBD projects – Top favourite with frequent unavailabilityNon-CBD projects – Newer options with good performance


Xi Riverview Palace City Garden Saigon Pearl The Vista The Estella Imperia An Phu

INDUSTRIAL & LOGISTICSQ 1 / 2 0 1 3 M A R K E T O V E R V I E WQ 1 / 2 0 1 3 M A R K E T O V E R V I E W

SKER ‐ Historical Land RatesKey Industrial Parks

300

400

500

600

n $US

Government to halt the opening of new economic zones and industrial parks and close down

/ / / / / / / / /0

100

200

300

Rent in industrial parks and close down

empty industrial parks across the country.

Q1/2007 Q1/2008 Q1/2009 Q4/2010 Q1/2011 Q2/2011 Q4/2011 Q3/2012 Q1/2013

Lowest 17 32 50 53 50 35 35 35 35

Highest 108 143 220 260 260 260 550 550 500

2012 has seen inefficient FDI projects axed

250

300

NKER ‐ Land RentalKey Industrial Parks

projects axed.

Foreign companies not financially

100

150

200

250

Rent in $US

g p yviable / not proceeding on projects have investment certificates withdrawn

Q1/2007 Q1/2008 Q1/2009 Q4/2010 Q1/2011 Q2/2011 Q3/2012 Q1/2013

Lowest 30 40 46 50 48 48 43 43

Highest 75 150 242 250 250 250 250 150

0

50

withdrawn.


Highest 75 150 242 250 250 250 250 150

INDUSTRIAL & LOGISTICSQ 1 / 2 0 1 3 M A R K E T O V E R V I E W

SKER ‐ RBF Historical Ratesf

Q 1 / 2 0 1 3 M A R K E T O V E R V I E W

6

7

8

SKER RBF Historical RatesKey Industrial Parks ($US / sqm / month) The declining demand from both

local and FDI business have forced developers at less desirable

3

4

5

6

locations to drop their rent significantly to attract more interest

while average land rental rates in

Q3/2008 Q1/2009 Q4/2010 Q2/2011 Q4/2011 Q1/2012 Q3/2012 Q1/2013

Lowest 2.3 2.3 2.5 2.6 1.8 2 2 2

0

1

2while average land rental rates in key industrial parks and locations

remain steady or slightly down

d ith 2012 Highest 7 5.5 5 4.5 6.5 6.5 6.5 5.5 compared with 2012.

NKER ‐ RBF Historical RatesReady Built Factory /Warehouse rental range

56789

$US

Ready Built Factory / Warehouse rental range

Q3/2008 Q1/2009 Q4/2010 Q2/2011 Q4/2011 Q1/2012 Q3/2012 Q1/2013012345

Rent in


Q3/2008 Q1/2009 Q4/2010 Q2/2011 Q4/2011 Q1/2012 Q3/2012 Q1/2013

Lowest 3 3 2.5 2.5 2.3 2.3 2.2 1.8

Highest 6.5 4.5 6 6.5 7.5 8.2 6.6 5

INDUSTRIAL & LOGISTICSO U T L O O K

Expansion from existing established projects continue to drive FDI in Q1/2013

O U T L O O K

drive FDI in Q1/2013

• Panasonic expanded to Binh Duong out of Hanoi’

• SanofiAventis expanded to SHTP out of D4 / Thu pDuc

• Samsung started construction of the 2nd campus in ThaiNguyen out of its existing campus in Bac NinhThai Nguyen out of its existing campus in Bac Ninh.

First tier cities such as HCMC, Hanoi and Da Nang capture the lion share of the emerging industries

& fincluding R&D, labs, software development and Business Process Outsourcing.

Third tier provinces such as Long An (South Vietnam) p g ( )and Bac Giang, Hung Yen (North Vietnam) or Quang Nam (Central Vietnam) continue to attract traditional sectors like garment, footwear, furniture thanks to their gmore relaxed industry restriction and inexpensive resources (land & labour).

Logistics operators are in expansion mode to meet rising


Logistics operators are in expansion mode to meet rising demand from FMCG & F&B

To subscr ibe, p lease contact…Q 1 / 2 0 1 3 r e l e a s e d A p r i l 2 2 2 0 1 3Q 1 / 2 0 1 3 r e l e a s e d A p r i l 2 2 , 2 0 1 3

[email protected]

© 2013 CB Richard Ellis (Vietnam) Co., Ltd. This report has been prepared in good faith and with due care by CB Richard Ellis (Vietnam) Co., Ltd. We obtained some of thei f ti b f b li t b li bl H h t ifi d th f th i f ti hi h bt i d f th d k

THANK YOU


information above from sources we believe to be reliable. However, we have not verified the accuracy of the information which we obtained from other sources and make noguarantee, warranty or representation about it. We include projections, opinions, assumptions or estimates which are made with careful consideration of factors known to us forexample only, and they may not represent current or future performance of the market. This information is designed exclusively for use by CB Richard Ellis clients, and cannot bereproduced without prior written permission of CB Richard Ellis.

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